WE’VE all seen the ads: two men sit on a park bench discussing their superannuation. “Compare the pair,” the ad suggests.

Man A is with a retail super fund, Man B is with an industry super fund — industry super fund wins out.

That’s all very well, but one fund manager has now questioned whether the body responsible for the ads, Industry SuperFunds Australia (ISA), should be allowed to advertise at all.

ISA represents 15 funds, including AustralianSuper, Cbus and Hesta, with a combined membership of more than five million workers. Unlike retail funds, industry super funds are run on a not-for-profit basis, meaning all profits must be returned to the fund to benefit members.

According to Chris Brycki, a former portfolio manager with UBS and BlueLake Partners and founder of online financial advisory Stockspot, the benefit conferred by splashing members’ money on costly advertising campaigns and sponsorships is questionable.

“Industry funds justify advertising by saying if we advertise we can attract more members, and that can bring your costs down,” he said. “Unfortunately there is no evidence that I have seen of this actually being the case.”

AustralianSuper, the largest with more than two million members, spent $6.7 million on advertising in the 12 months to June 2014, according to Nielsen. The overall Industry SuperFund group spent $29.1 million in the same period.

“To give you an example, AustralianSuper’s ‘admin and operating expenses’ have gone from $103 million in 2006 when they managed $28 billion for 1.3 million members, to $214 million in 2013 when they managed $65 billion for two million members,” Mr Brycki said.

“That’s a jump from $79 in admin expenses per member to $107 per member. This is in the context of an environment where other areas of super have seen rapid decreases in administration and reporting expenses due to cloud cost efficiencies.”

David Whiteley, chief executive of Industry SuperFunds, told News.com.au any increase in fees from individual funds would be for “a number of reasons” and that it was “illogical” to suggest one segment of the super industry should not be allowed to advertise.

“I would contest that the fees are increasing, and I would certainly contest they’re increasing due to advertising,” he said. “The reality is the ads have proven to be highly effective, which is why the major banks don’t like them. If fees from individual funds have increased over the last decade, there would be a number of reasons for this.”

Mr Whiteley added: “The primary objective of the advertising is to inform members of the benefits of industry super in a competitive market where Australians have the right to choose their own super fund. It is illogical to suggest that one sector should not be permitted to advertise.

“The collective advertising campaign is a cost-effective way to inform members of the benefits of the industry super sector and the individual funds themselves.”

Alex Dunnin, director of research at financial services analyst Rainmaker Group, described the advertising debate as “nonsensical”. “As soon as you make funds compete, which is what’s been happening, then part of that is advertising,” he said.

“It’s a point that comes up a lot but I just find that argument incredulous — that industry funds shouldn’t be allowed to advertise. The interesting thing is funds that do the most advertising, HostPlus for example, they actually have top performance and the lowest fees.”

While technically it is true to say that fees for industry super funds have increased by 10 per cent over the past 10 years — from 0.9 per cent to 1.0 per cent on average — fees have been stable for the past five to six years, Mr Dunnin said.

“Where industry fund fees are going up is in the personal space — for example, you might decide even though you’re not a builder, you like Cbus and want to join,” he said. “Those fees are going up.”

Average fees in the personal space for industry super funds jumped from 1.03 per cent in 2013 to 1.15 in 2014, according to Mr Dunnin. “Industry funds are playing catch-up with the big banks from a technology perspective, and they work on a cost-recovery basis. As they start to add member services, their costs increase, and as they add costs they increase their fees.”

By way of comparison, retail funds in the workplace segment charge an average of 1.6 per cent, while retail funds in the personal space charge an average of 2.1 per cent.